Reasons Why Pepsico (NYSE:PEP) is a Top Dividend Stock to Buy
The multibillionaire food and beverages manufacturing company is famous for its high yielding dividend stocks. The company has a good reputation of paying well to its stock holders and also has the potential of raising its stock value every year giving it a competitive edge over its competitors. This is the reason why investors consider Pepsico (NYSE:PEP) an ideal place to invest. One of the reasons why Pepsico (NYSE:PEP) makes it to the top and generates and pay hefty amounts of dividends, is that Pepsico (NYSE:PEP) is a perfect blend of dividend growth and dividend yield.
The company produces high yield but shows no growth in its dividend, but sometimes it’s the exact opposite. The stock’s current yield rate is 2.7% which is more favorable in comparison to a S&P 500 index with a rate of 1.88%. Pepsico (NYSE:PEP) has a reputation for increasing dividend growth rate and has consistently increased its growth of dividend for the past 42 years and 7% compounded annually in just past 5 years. So we can establish this fact that Pepsico (NYSE:PEP)’s dividend grows by 10% every year.
Long story short both long and short term investors can benefit from Pepsico (NYSE:PEP)’s high yielding dividend. According to analysts, investors which come looking for profits in bulk can find Pepsico (NYSE:PEP) an ideal place to invest, a company which has a solid growth rate. However another reason for the company’s strong profits is its diverse business model, which is why Pepsico (NYSE:PEP) is able to maintain high dividend yield and high dividend growth at the same time.
The diversity is the main deal for the company. The company consists of two core departments’ foods and beverages and gets even revenue from both sectors. Quaker and Frito Lay are its foods businesses, while its beverages include its exclusive Pepsi, Tropicana and Gatorade. The company’s strong brands contribute greatly in marking high profits through which it keeps on rewarding its shareholders. Pepsico (NYSE:PEP) has been able to generate $5.1 billion in the first three quarters of the year having a dividend that accounts for 53% of its cash flows.
The payout ratio is extremely appealing and still leaves plenty of capital for the company to further expand and generate more business activities. Having a payout ratio this low is an evidence of the company’s outstanding business activities. The company’s revenue grew by 11% in Africa, Middle East and Asia alone and the earnings are expected to grow by 9% this year. The management has high hopes and expects more satisfying results.
They also plans to boost the company’s cash flows by inducting a $1billion cost savings plan this year. The investors are aware that to earn high profits the key is to invest in well constructed business portfolios to create wealth with a steady pace while allowing you no worries. The analysts suggest that Pepsico (NYSE:PEP)’s portfolio is one of the dream portfolios for investments.